Business for Development Taps into Rubber

New member of the APNGBC, Business for Development is an independent NGO formed in 2007. In the last decade, they have been prototyping how the private sector can work with communities, governments, multilateral organisations and NGOs to solve extreme poverty through inclusive business models in the developing world.

So far, Business for Development have consulted to over 20 leading multinational companies and have advocated the uptake of inclusive business models to over 4,000 business leaders. Here they tell us about one of these success stories: Tapping into Rubber.

Business for Development, an inclusive business broker, was engaged by Ok Tedi Development Foundation (OTDF) towards the end of 2014 to develop, as part of their livelihood community development programs, a smallholder farmer inclusive business initiative in Western Province. After researching market opportunities, it became apparent that there was potential to tap into natural rubber production.

Considerable investments have been made into the rubber industry’s development in Western Province over the last 20 years. Natural rubber production has the potential to provide sustainable livelihoods for more than 10,000 smallholder rubber farmers living in remote areas of the North, Middle and South Fly districts.

Inclusive businesses are commercially viable business models that include low-income consumers, retailers, suppliers and/or distributors in core operations. Fundamental to the inclusive business concept is the belief that commercial drivers – including expanding markets for products and services to maximise profit – can be aligned with development outcomes, including creating opportunities for the poor and disadvantaged. Unlike corporate philanthropy and corporate social responsibility programs, which are primarily driven by ethical considerations and a desire to minimise impacts and enhance reputation, inclusive business addresses development challenges through core business activities.

The project aims to redesign the rubber industry in Western Province in a way that creates greater opportunities for income generation in these remote communities that would otherwise remain living in extreme poverty. To achieve this end Business for Development was commissioned by OTDF, to map the existing value chain, identify new supply chain opportunities and introduce off-take partners that will enable income generating activities for these farmers.

The value chain for natural rubber begins with the rubber tree. From there tapped and coagulated cup-lump is collected and transported to factories where the processing begins to produce technically specific rubber grades that are used globally for the manufacture of tyres and other rubber products. After mapping the process along the Fly River, an MOU was negotiated with Olam International last year, introducing this large global commodity trading company as a key commercial off-take partner for rubber produced throughout Western Province.

By year end, it is planned to begin construction of a rubber factory at Aiambak on the Fly River, with a view to produce creped rubber for export to supply the identified market demand. This will provide immediate access to global markets for the rubber produced by the people of the remote Lake Murray and Middle Fly areas, utilising a new road recently constructed by OTDF, that now links Lake Murray to the Fly River at Aiambak. Over time, it is anticipated that this initiative will benefit thousands of Papua New Guineans in Western Province, who will now have the opportunity to build links with international markets for their rubber and be able to improve their incomes and livelihoods in the years to come.